I’m Jesse Snyder, filling in for Anita, who’s on assignment this week.
If the signals coming from Ottawa are any guide, Canada could ban Chinese and Russian-made “smartcar” tech from Canada’s automotive supply chain relatively soon.
But industry sources say the real-world implications of such a policy will be far more drawn-out and difficult.
On Tuesday, Deputy Prime Minister Chrystia Freeland confirmed that Canada is “absolutely” taking steps to match the Biden administration’s proposed clampdown on Chinese and Russian-made automotive tech.
The U.S. prohibition will ban imports of the components that enable features like autonomous and assisted driving. U.S. officials say software and hardware manufactured by “countries of concern”—specifically, China and Russia—are susceptible to espionage, and therefore pose a national security risk.
Should Canada follow suit, Canadian automakers will take time to fully pivot away from Chinese tech providers, said Brian Kingston, CEO of the Canadian Vehicle Manufacturers’ Association. And time is of the essence: Canadian officials would have to align Canada’s phase-out with that of the U.S. to give automakers ample time to seek alternatives.
“You can’t change a supply chain overnight,” Kingston said. “You have to ensure there are suppliers that can produce these product inputs and materials in the North American sphere, and do it relatively quickly.”
The U.S. proposal, which hasn’t been finalized, would phase out the foreign software by 2027 and hardware by 2030.
Shifting to new tech providers will be a major undertaking for auto companies, said Daniel Breton, head of Electric Mobility Canada, given how integrated China is across the Canadian supply chain.
The latest vehicle models are increasingly connected, powered by complex networks of cameras, sensors and advanced software. Untangling and rebuilding those systems to remove Chinese suppliers could present a “significant challenge,” Breton said.
At the same time, Canadian suppliers could be exposed should Chinese authorities respond in kind. BlackBerry is deeply embedded in China’s EV supply chain, and Chinese firms, including manufacturing giant Dongfeng Motor, have selected both of the Canadian company’s Ivy and QNX platforms to power some of their automotive systems. BYD, China’s largest EV maker, uses a karaoke product developed by Montreal’s Stingray in its cars.
Both sides in the U.S.-China trade war appear to be digging in, with their allies closing ranks. Canada has already slapped 100 per cent tariffs on Chinese-made EVs, and is contemplating more curbs on batteries.
Even so, Breton said these latest measures may not spell the end of China’s EV push into the West. If the dust settles on the China-U.S. EV war, he said, Chinese companies may opt to manufacture some products on this side of the Pacific to skirt trade barriers, much as Japanese companies did in the 1980s.
“I wouldn’t be surprised if a few years from now, Chinese manufacturers end up opening plants in North America.”
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